July 18, 2006

Australia's wheat saved by timely rains

Rain across eastern Australia over the weekend has saved the country's 2006/07 wheat exports from the brink of disaster, but the worst may not be over, farmers said.

The eastern wheat crop was expected to undergo deep cuts after Australia's driest June in over a century. However, weekend rains of 20 mm to 40 mms in the eastern growing areas helped improve the outlook.

Last week, forecasts for Australia's 2006/07 wheat crop were cut by 25 percent to 18 million tonnes due to the dry conditions.

The Australian Bureau of Agricultural and Resource Economics is forecasting that this crop would yield exports of 17.5 million tonnes, up slightly from 16.1 million tonnes the year before.

However, analysts say the forecast remains optimistic, even with the weekend rains.

There was still a risk this year would be similar to 2002/2003, when severe drought decimated crops and exports, Alan Brown, chairman of the rural affairs committee of the New South Wales Farmers Association, said.

For that year, Australia's wheat exports plunged to just to 9.1 million tonnes, from 16.3 million tonnes the year before as its wheat crop fell to 10.1 million tonnes, from 24.3 million tonnes in 2002.

To worsen fears, both Eastern and Western Australia are suffering from drought conditions this year, unlike in 2003, when crops from the latter were able to supplement reduced stocks from the former.

Still, recent rain in New South Wales have created doubts that Australia would see a repeat of 2003.